Funder/Founder Syndrome and a CEO Revolving Door at the Nonprofit Newseum

August 29, 2017; Washington Post

The future of the Newseum, the massive 250,000-square-foot monument to journalism in D.C., is very much in doubt, as the Freedom Forum, formerly known as the Gannett Foundation, is considering a partial or complete sale of the building that houses it.

This is not the first time the building, bought only in 2000, has been considered as a way to leverage a better long-term cash position; in 2014, museum officials considered similar options to free up cash to wage a $250 million fundraising campaign that, had it been successful, would of course have broadened its donor base a bit.

Apparently, after putting about $500 million into the institution over the past 20 years, the Freedom Forum has grown tired of being the go-to funder in an impressive deficit spending situation. Why now, at a time when living journalism is struggling to remake itself and the importance of promoting an understanding of the First Amendment becomes ever clearer? Freedom Forum chief executive Jan Neuharth explained the rationale in a statement:

It has become obvious that the current model—where the Freedom Forum is the primary funder of the Newseum—cannot continue indefinitely at this level. Left unchecked, this deficit spending rate would eventually drain the Freedom Forum’s entire endowment, and the annual cash drain prevents us from allocating any new capital to First Amendment programs that are at the heart of our educational mission.

Neuharth isn’t just speculating about this last point; the deficit on its 2015 Form 990 was more than $2 million, and the year before, it had been more than $5 million. The Freedom Forum’s own assets plunged over a decade from $1.1 billion in 2006 to $804 million in 2015, according to its tax filings. But do they have the right to complain?

Presumably to stop the leaking, Neuharth herself has taken over the reins of the Newseum, as CEO Jeffrey Herbst stepped down Monday. This makes Neuharth the fifth executive in seven years, and that fact alone would suggest there are some serious problems in the governance of the two groups. But, there’s more: She will be joined by the Newseum’s board chairman, Peter Prichard, and Scott Williams, the museum’s chief operating officer. This crew seems to be made up, at least in part, of some of the very same people who ushered in the mess in the first place. Is that likely to work?

To support this speculation, we note one additional clue in Prichard’s bio on the Newseum website: “From 1995 to 1997, Peter Prichard was senior vice president of the Freedom Forum and executive director of the Newseum. He was president of the Newseum from 1997 to 2008.” Prichard is still on the Newseum board of trustees.

And just to drive the point home about an organization locked in a kind of funder-founder controlled limbo, here is an excerpt from a report of the situation from the Washington Times in 2014:

The chief executive of the Newseum and its parent organization the Freedom Forum has resigned from the museum of journalism and the First Amendment after three years at the helm of an organization struggling to cover its costs.

On Tuesday, James Duff announced plans to return to his previous post as chief administrative officer of the U.S. Courts under an appointment by Chief Justice John Roberts. When the chief justice calls, “it’s hard to say no,” he said. Duff had led the Newseum since 2011.

For many years the Newseum was led by former journalists from Gannett Co. and USA Today. It will now return to their care. Former USA Today editor Peter Prichard has been named the Newseum’s CEO. Jan Neuharth, daughter of Newseum founder Allen Neuharth, will be the Freedom Forum CEO.

—Ruth McCambridge